Why Leading International Companies Value Safety. Rick Howarth, General Manager Intel Products Vietnam

Transcription

1 Why Leading International Companies Value Safety Rick Howarth, General Manager Intel Products Vietnam 1

2 Agenda Introduction the Call to Action for Vietnam Brief History of Corporate Safety Focus Examples of Companies that value safety Why Safety is Important General Benefits Intel History Background Corporate Values The Role of Safety in Intel s Competitiveness Results Green Cross Award Top holding in CSR Funds What it will take to compete: What Intel and Others Will Expect The Challenge and the Opportunity 2 2

3 Brief History of Corporate Safety Focus In the 20 th century, low safety standards led to reduced profitability and reputation for many companies, as well as public demand for improvement Legacy and Leadership of DuPont Manufactured explosives in WW1 Developed high standards for safe manufacturing By the 1930s, it was established company policy that safety is just as much a part of industry as any other operating feature Today, many international companies view safety as DuPont does an integral part of business 3 This is a brief slide to acknowledge that many companies had little choice but to improve safety, normally as a result of suffering serious accidents or calamities. The point to make is that DuPont led the way to making safety a normal part of business quality, rather than simply a prioritized response to accidents. From DuPont s corporate web page: Safety in the workplace, a long-standing hallmark of the DuPont Company, emerged during the trials of World War I. Being an explosives manufacturer had historically made DuPont more safety conscious than most other manufacturers. Especially significant progress in reducing accidents had been made in the years just prior to the war. However, the influx of tens of thousands of untrained workers into the munitions industry during the war created the potential for disasters. Explosions did occur in several American plants, killing hundreds. During the war DuPont made safety an essential and permanent part of engineering and employee relations. After the war, the new company president, Irénée du Pont, intensified the company's safety consciousness and began to award individual prizes for long accident-free performance. Irénée became a major spokesman for the growing safety movement in America generally. By the 1930s, it was established company policy that safety is just as much a part of industry as any other operating feature (quality and quantity of finished products, efficiency, methods, etc.). 3

4 Benefits of EHS Avoidance - Reducing Cost of Accidents: Oil and Gas High Severity/Low Probability Hi-Tech loss of 1 wafer Construction loss of critical infrastructure Government lost opportunity Achievement Gaining advantage Attract and retain top employees Support long-term stability Gain competitive advantage with customers 4 In this slide, we contrast two of the desirable benefits of safety. The more obvious is avoiding undesirable things. However, less obvious but perhaps more important is what a company can achieve. 4

5 The Most Important Benefit Caring about people and the environment allows companies to marshal their resources for the good of themselves, for their business environments, and for society in general. 5 It s really all about People. 5

6 Examples of Companies Which Changed Their Future by Leading in EHS Paul O Neill, the former US Secretary of Treasury, was previously hired in the 1987 to turn around ALCOA, the large aluminum producer. He famously directed his senior managers to begin showing genuine concern for employees well-being and safety, citing it as the critical first step in re-establishing their morale and loyalty, and, thereby, productivity. O Neill fired several managers who did not show such concern which sent a clear message to the others. Despite falling global aluminum prices, ALCOA s revenues doubled under O Neill s leadership 6 6

7 When the giant, international Swedish construction company Skanska decided to expand its US operations in the early 2000 s it purchased 11 successful US regional construction companies. One of these companies was Baugh Construction Oregon, which had worked with Intel in building safe construction culture for many years. Skanska was faced with trying to align 11 separate companies, each very successful and each with very different company cultures. The Baugh Construction division suggested that EHS Leadership could be the core value that could help energize and unite the 11 divisions and their employees, and Skanska enthusiastically embraced the proposal. Today, Skanska USA is a recognized leader in construction safety, and routinely influences improvement not only of their own projects, but local construction practices in general. 7 7

8 Why EHS is Important to Intel Business Need Intel needs to deliver high-quality semiconductors to the market as quickly as possible. Constructing and operating new-technology semiconductor facilities are historically hazardous operations. History Manufacturing interruptions and failures due to accidents and environmental incidents in the 1980 s led to executive mandate to improve safety of factories. Engineering processes succeeding in reducing accidents dramatically Company grew 3-4X during period of high focus on safety, resulting in belief that EHS was company culture. Results National Safety Council Green Cross for Safety Award (2001) Top Holding in Corporate Social Responsibility funds Factoid: It is statistically safer to work on an Intel construction site than it is to work in an office for most companies 8 8

9 National Safety Council (US) Green Cross for Safety Winners Michael L. Eskew Chairman & CEO UPS 2006 Charles O. (Chad) Holliday, Jr. Chairman & CEO DuPont 2005 Edmund F. (Ted) Kelly Chairman, President and CEO Liberty Mutual Group 2004 Dr. Dieter Zetsche President & CEO Chrysler Group of DaimlerChrysler 2003 Gerald Kenny and the Kenny Family Kenny Construction Company 2002 Gregory T. Swienton President & CEO Ryder System Inc Craig R. Barrett President & CEO Intel Corporation 2000 Richard M. Wardrop, Jr. Chairman & CEO AK Steel Corporation 9 Here are some other companies that have embraced EHS as a company value and have been recognized for it. 9

10 Competitiveness in Asia Asia is changing, improving and beginning to succeed in EHS China, Malaysia, Philippines are learning safe practices Companies that have worked with Intel and other international companies and embraced high standards of safety have received government recognition in The Philippines and Malaysia, as well as Costa Rica and Israel. In Malaysia, Philippines and Costa Rica, government agencies are modeling some efforts after those observed on international sites. Vietnam must change to compete! 10 This is a brief transitional slide to move to the next concept. But the point is that other countries are succeeding and not only being recognized, but influencing how their governments regulate safety. 10

11 Phases of Safety Excellence Phase 0 Danger Phase 1 Avoidance Phase 2 Cost Phase 3 Priority Phase 4 Value Phase 5 Instinct No safety; Many accidents And injuries Avoid fines, work stoppages Accidents cost too much Safety is a priority Safety is a value Safety is Instinctual Culture Focus SAFETY SUCCESS Compliance Focus Self Assessment Data Focus A Model of Safety Development in Organizations 11 This model represents the phases of maturation of an organization s safety culture. The point is that true success means building a different culture, and that building culture takes time. Companies must think in terms of immediate needs and longterm goals. Red is the attitude of people in the organization Yellow represents where the key leaders should be focusing on as we move to the next and more advanced stage. Best council for leaders. Scenario start with phase 0 and use helmet use in Vietnam as an example Key message is about the yellow bars this is what management and senior leadership need to do to move the organization forward. If stuck in one phase you will not progress to the next. Compliance: Dupont says don t get stuck here. It is tempting to stay here as it works. It will stop a good number of injuries but it is all compliance and will continue to take policing to work. Self Assessment: Dupont says stop getting people to follow rules. Create a model for self assessment Early on this looks at lagging indicators this must transition to a culture focus a focus that drives a discussion about the organization s vision /goals in relationship to safety which in turn transitions the org to focus on leading indicators. Describe Leading indicators here and the change in cultural attitudes. 11

12 Injury-Free Environment (IFE) Principles All injuries/incidents are preventable No injuries/incidents are acceptable If work is not safe, it stops Everyone plays a role and has responsibility 12 Intel refers to its philosophy of safety as Injury-Free Environment, and this illustrates its key tenets. 12

13 3 Key Elements for Creating IFE Highly visible, unwavering management support Individual commitment at every level Clear, frequent, direct, open communication 13 Achieving IFE requires three elements. Intel practices these and expects its suppliers and business partners to do the same. 13

14 What Intel and Others Expect Philosophical: No Acceptance of Accidents as Normal Business Recognition that quality and longevity cannot be achieved without EHS Strategic: Clear expression of Concern for Worker Well-being Frequent and Open Communication with workers about EHS Long-range planning for developing new culture Tactical: International Standard Fatality Prevention Highly skilled EHS and supervisory staff High-quality safety equipment Continuous Training Use of Data to Identify Trends and Eliminate Common Injuries 14 The point of this slide is to demonstrate three ways leading companies must show support in order to compete internationally: Philosophical means they must actually learn to value people Strategic means they must treat safety as a long-term and permanent growth area for their companies, and must take a long-term planning approach. Tactical means they must back up their beliefs with time, money, personnel and procedures. 14

15 Environmental Protection Waste Management Solid waste to licensed landfills Hazardous Waste to international-standard transport/disposal firms Measurable recycling of reusable materials Pollution Reduction Water Protection 15 15

16 Does EHS End at 5:00PM? The Case for Personal Safety The leading cause of accidental death in Vietnam is head trauma suffered in motorbike accidents by people not wearing helmets. Intel and other companies are providing helmets to their employees and encouraging or requiring helmet use. Wear a helmet personally, and insist that your employees and families do the same. 16 And how about this concept? Safety and environmental protection are not just priorities at work they are values that benefit people, companies and society in general. Wearing safety helmets is an example. This is just the tip of the iceberg. 16

17 The Challenge If EHS in Vietnam improvement is inevitable. Do you prefer to be at the leading edge of the wave, or Will you be like most, and wait until forced to improve? 17 Let me conclude with this slide. This is a provocative but inspirational challenge. 17

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